Archive for August, 2010

The Wall Street Journal Metropolis blog reports that New York Governor David Paterson has signed into law the Bedbug Disclosure Act.

The law requires building owners to disclose a one-year history of bedbug infestations in their buildings to potential tenants.

“New York City tenants have been living in fear of bedbugs, and I am excited to offer them this new protection,” Assemblywoman Linda B. Rosenthal, who represents Manhattan’s Upper West Side and sponsored the legislation tells the WSJ.

The bedbug problem appears to be particularly acute in New York City where a number of businesses such as hotels, clothing stores, hospitals and even the Empire State Building have been affected, as well as apartments and homes.

Over at Risk Management Monitor, Jared Wade notes that the wave of bedbug infestations in the city has resulted in a lot of reputation damage to local businesses.

It’s not just the Big Apple that’s been feeling the bite. This summer has seen a resurgence of bedbug infestations across the United States.

The Environmental Protection Agency (EPA) and the Centers for Disease Control and Prevention (CDC) recently issued a joint document on bedbug control. In it they acknowledge:

The current national problem with bed bugs is likely due to the convergence of three human behaviors: lack of awareness of the historical and biological link humans have with bed bugs, increased international travel, and past over-reliance on pesticides.”

The EPA and CDC recommend an integrated pest management (IPM) approach to control bedbugs that includes: using monitoring devices; removing clutter where bedbugs can hide; applying heat treatment; vacuuming; sealing cracks and crevices; using non-chemical pesticides and judicious use of chemical pesticides.

This is a good time to mention that from insurers’ perspective the cost of getting rid of bedbugs, like other vermin, is considered part of the maintenance associated with owning a home and generally is not covered by standard homeowners’ and renters insurance policies.

Most standard commercial property insurance policies also have vermin exclusions for infestation, but it’s important to discuss the terms of an individual policy with your insurance agent.

However, further legislation in the bedbug arena may be helpful in defraying some of the costs. The WSJ reports that another bill introduced in the New York Assembly would create a state tax credit for bedbug sufferers who have had to replace furniture, bedding and other items because of bedbug damage.

Hurricane Earl – a Category 3 hurricane on the Saffir-Simpson scale (sustained winds 111-130mph) – is currently bringing heavy rain and high winds to the northern Lesser Antilles Islands in the Caribbean as it makes its way toward the west-northwest near 15 miles per hour.

According to the National Hurricane Center (NHC), the center of Earl is expected to pass near or over the northernmost Virgin Islands this afternoon and this evening.

A hurricane warning is currently in effect for Anguilla, St. Martin and St. Barts, St. Maarten, Saba and St Eustatius, British Virgin Islands, U.S. Virgin Islands, and the Puerto Rican islands of Culebra and Vieques.

Jeff Masters’ Wunderblog reports that once Earl passes the Lesser Antilles, steering currents favor a northwesterly course towards North Carolina:

“History suggests that a storm in Earl’s current location has a 25 percent chance of making landfall on the U.S. East Coast, and Earl’s chances of making a U.S. landfall are probably close to that.

None of the computer models show Earl hitting the U.S., but the storm will likely come uncomfortably close to North Carolina’s Outer Banks and to Massachusetts.”

Here’s the latest forecast track from the NHC:

0830HurrEarl

 

 

 

 

 

 

 

 

 

 

 

Check out I.I.I. hurricane fact files and market share by state.

Flood insurance and what to do with the National Flood Insurance Program (NFIP), the federally-backed program that insures about 5.6 million policyholders across the United States, continues to make the headlines.

A quick recap: the program has been allowed to lapse three times this year and is currently set to expire again September 30 – two months before the end of the Atlantic hurricane season – unless Congress authorizes another extension.

Yesterday, a USA Today article by Tom Frank discussed how the NFIP’s $19 billion deficit is not just the result of huge losses from Hurricane Katrina and premium rates that do not reflect the risk of loss, but because it continues to provide subsidies for severe repetitive loss properties.

Today a story at the TheStreet.com notes that private insurers participating in the NFIP are reconsidering their involvement after Congressional stalling and huge losses put the program’s future in doubt.

The General Accountability Office (GAO) has made clear in various studies and testimony that the NFIP is not actuarially sound and that the situation exposes the federal government and ultimately taxpayers to ever-greater financial risks, especially in years of catastrophic flooding.

Today’s op-ed in USA Today suggests that one option to fix this ludicrous situation is to phase out the federal program and turn it over the private insurers. A second option would be to restructure the program to allow it to charge premiums that reflect the true cost of risk.

What do you think?

Check out I.I.I. facts and stats on flood insurance.

The fifth anniversary of Hurricane Katrina gives us all pause for thought. Katrina was the costliest hurricane, as well as one of the deadliest, in U.S. history.

Here’s a look at the storm by some of the numbers (sourced from the I.I.I. white paper: Hurricane Katrina: The Five Year Anniversary):

  August 29, 2005: the day Hurricane Katrina made its second U.S. landfall as a Category 3 storm in southeast Louisiana.

  1,300-1,500: the estimated number of people who lost their lives as a result of Hurricane Katrina.

 $41.1 billion: the amount private sector insurers paid out to policyholders for insured losses across six states.

 1.7 million: the number of auto, home and business claims received by insurers.

 $16.1 billion: what the federal government’s National Flood Insurance Program (NFIP) paid out in flood insurance claims from Katrina.

 $2-$3 billion: the amount private sector insurers paid out in damages to offshore energy facilities.

 99 percent: the proportion of the 1.2 million personal property claims settled by the second anniversary of the disaster.

 Fewer than 2 percent: the share of Katrina homeowners claims in Louisiana and Mississippi that were disputed either through mediation or litigation.

The National Hurricane Center (NHC) said early this morning that Tropical Storm Danielle is strengthening and likely to become a hurricane within the next 24 hours.

The fourth named storm of the Atlantic hurricane season is currently located about 850 miles west of the Cape Verde islands with maximum sustained winds of about 60 miles per hour.

On its current track Danielle appears to be heading in a northwest direction toward Bermuda.

Here’s the latest forecast track from the NHC:

0823TSDanielle

 

 

 

 

 

 

 

 

 

 

 

 

Of course much could change before Danielle even comes close to the east coast of the United States. However, it’s worth noting that at least one forecaster – WSI Corp – has warned that the Northeastern U.S. faces an increased risk of hurricane landfall this season.

Meanwhile, Bermuda is no stranger to hurricanes.

Hurricane Fabian, which hit Bermuda with 120 mph winds in early September 2003 as a Category 3 hurricane, was the strongest hurricane to hit the island since Hurricane Arlene in 1963.

Fabian caused four deaths on the island and significant property damage as it battered Bermuda with a reported storm surge of 10ft. NHC estimates Fabian caused at least $300 million property damage in Bermuda.

Check out I.I.I. facts and stats on hurricanes.

And now for some celebrity news.

Cameron Diaz, Julia Roberts and Jessica Biel are the riskiest celebrities to search for on the Internet.

Yes – this trio of American actresses top the list of most dangerous celebrities in cyberspace, according to Internet security company McAfee.

Meanwhile, politicians like U.S. president Barack Obama and, dare we mention her name in the same sentence, Sarah Palin are among the safest.

McAfee research found that searching for the latest Cameron Diaz pictures and downloads yields a 10 percent chance of landing on a website that’s tested positive for online threats, such as spyware, adware, spam, phishing, viruses and other malware.

Clicking on these risky sites and downloading files like photos, videos or screensavers exposes surfers or consumers to the risk of downloading the viruses and malware designed to steal their personal information, the study revealed.

McAfee noted that while consumers are getting smarter about searching online, cybercriminals are getting sneakier in their techniques. Dave Marcus, security researcher for McAfee Labs, says:

Now they’re hiding malicious content in ‘tiny’ places like shortened URLs that can spread virally in social networking sites and Twitter, instead of on websites and downloads.”

In case you were wondering, three of Victoria’s Secret top models are among the top 10 this year. Searching for downloads of Gisele Bündchen (#4), Adriana Lima (#6), and Heidi Klum (#9) can result in landing on a high percentage of risky sites.

Leading men Brad Pitt (#5) and Tom Cruise (#8) also made the top 10.

Check out I.I.I. information on identity theft.

Munich Re recently reported that worldwide natural catastrophes resulted in total economic losses of $70 billion and record insured losses of $22 billion in the first half of 2010.

Catastrophes outside the U.S. cost insurers a lot more than domestic disasters in the first-half of the year, which was unusual.

Disasters in the U.S. in the first-half accounted for just 28 percent of global insured catastrophe losses, compared with an average of 60 percent since 1980, according to Munich Re.

Since the half-year point, natural catastrophes around the world have continued apace. In recent weeks we’ve seen severe floods in Pakistan and China and Central Europe, forest fires in Russia, as well as the first hurricane of the Atlantic season here in the U.S.

In early August Munich Re said that the number of extreme weather events like windstorm and floods has tripled since 1980 and the trend is expected to persist.

Despite its somewhat slow start, forecasters predict the Atlantic hurricane season is about to kick off.

Over at Wunderblog, Dr. Jeff Masters notes that three models predict that a tropical storm will form between Africa and the lesser Antilles Islands sometime in the next three to six days.

All of which reminds us of the key role insurers play in defraying the economic costs of disasters.

Check out I.I.I. facts and stats on global catastrophes.

Studies have shown that tort reforms, particularly caps on noneconomic damages, are a key contributor to lowering medical liability claims and costs and ultimately healthcare costs.

Better risk management by hospitals – such as prompt disclosure of medical errors — is also being shown to help reduce these costs.

The Annals of Internal Medicine reports that during the period in which a program was implemented at the University of Michigan Health System (UMHS) to fully disclose medical errors to patients and offer compensation, there was a reduction in the number of new claims filed and a decline in lawsuits.

After the program was implemented, the average monthly rate of new claims decreased from 7.03 to 4.52 per 100,000 patient encounters.

The average monthly rate of lawsuits decreased from 2.13 to 0.75 per 100,000 patient encounters, while the median time from claim reporting to resolution declined from 1.36 to 0.95 years.

There are a couple of caveats to the study findings. As noted by the Wall Street Journal health blog, whether the costs and number of claims declined as a result of the program is not clear, since there was no control group.

In addition, malpractice claims in general were on the decline in Michigan in the latter part of the study period.

Still, the fact that total liability claims and liability costs did not increase during the implementation of the UMHS program is a positive.

Medical errors are extremely costly. A study recently completed by consultants with Milliman and commissioned by the Society of Actuaries (SOA) estimated that measurable medical errors cost the U.S. economy $19.5 billion in 2008.

Experts said the study findings highlight the need to reduce medical errors and improve quality and efficiency in American healthcare.

Check out I.I.I. information on medical malpractice.

Inadequate building codes in two Gulf coast states devastated by Hurricane Katrina could leave new and rebuilt properties at risk of future damage, according to a new study from the Institute for Business and Home Safety (IBHS).

 The warning comes just ahead of the fifth anniversary of Hurricane Katrina, the most costly insured disaster in United States history, which caused more than $41 billion in insured damage and 1.7 million claims across six states (Louisiana, Mississippi, Alabama, Florida, Tennessee and Georgia).

In its analysis of pre- and post-Katrina building codes, IBHS found that while there have been positive steps taken in a number of coastal communities and counties in Alabama and Mississippi, only Louisiana took steps to adopt and enforce a statewide building code after Katrina struck.

IBHS researchers wrote:

There is no question that no one wants a repeat performance of this devastating event that left at least 1,300 people dead. Yet, the steps taken to improve the quality of the building stock, whether through rebuilding or new construction, call into question the commitment of some key stakeholders to ensuring that past mistakes are not repeated.”

Check out the Disaster Safety blog for more on the IBHS analysis. Check out IBHS information on building codes here.

For more information on Hurricane Katrina and insurance issues, check out a new white paper from the I.I.I., Hurricane Katrina: The Five Year Anniversary.